News

Ohio dropping smart cards for EBT program

October 12, 2003

The current cards are "the Lamborghini of all systems," said Lisa Hamler-Podolski, director of the Ohio Association of Second Harvest Food Banks. "In our current budget system, we can't afford to spend money on technology that's not the current industry trend."

The state said the current system is too expensive, costing up to four times as much as other programs. Iowa had installed 11,000 machines to read the cards at groceries and other stores statewide.

The Department of Job and Family Services will seek competitive bids to operate a new magnetic-strip system by the end of the year.

The current two-year, $44 million contract with Citicorp Electronic Financial Services ends in 2005. Company spokeswoman Anita Gupta said Citicorp had no comment.

"The thinking is that someday people will move toward smart card technology," said state human services spokesman Jon Allen. "But because it's not something that's going to happen in the immediate future, we should be able to realize some cost savings by moving to magnetic-strip cards."

Hamler-Podolski said the current system offers limited options to food stamp recipients since not all grocery stores had smart card readers in every checkout lane.

The current card can also be confusing to food stamp recipients, who must choose one of three locations - usually a grocery store - each month to have their food credits recorded by the card's computer chip.

However, they could use any grocery store in their area that had a card reading machine, said Beth Kowalczyk, senior statewide attorney for the Ohio State Legal Services Association.

In addition, "people would lose food stamps if they didn't load them onto their card in a timely fashion," Kowalczyk said. "That would be unnecessary now."

A magnetic stripe card also would recipients to withdraw cash welfare benefits at an ATM, something that cannot be done with a smart card.

Ohio had about 884,000 food stamp recipients in August, according to the AP.

A 2002 federal analysis comparing Ohio's smart card with a magnetic system used in Maryland revealed Ohio was spending 56 percent more. The additional cost was attributed to more expensive hardware, software and the cards themselves - $4 for a smart card versus 57 cents for a magnetic-strip card.

Under the unbid Citicorp contract, Ohio pays $4.74 per household per month for the smart card. The magnetic-strip card system Citicorp administers for Indiana costs $1.26 a month and also is used to distribute cash assistance to welfare recipients.